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Design wins

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Has anyone on this board had any direct industry experience that would allow them to comment on design wins? I am particularly interested in what constitutes a design win and does the industry (companies within the industry) inflate their design win numbers?

In other words, and using a very simplistic example, I get a design win for a sweater that is one design win. If they produce the thing in 3 different colors do I now have 3 design wins? Any of that kind of stuff going on with the 100+ design wins for VTSS?

Not that it matters but the number reported for "design wins" is a totally unchecked and unaudited number. You can make up a number for design wins with total impunity as far as auditors are concerned. They are not required to check the accuracy of that number.

Posted by dlog - 14 years ago | Updated 14 years ago

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I think a bigger question is what % of "design" wins ever move on to the manufacturing stage where the chip actually goes into production and generates revenue. I think a lot of them don't for various reasons including project cancellation, newer technologies, mergers and acquisitions etc. I remember Lou the crook saying that they had tried to project revenue based upon design wins in the past, and had not been successful. Gardner has also repeated that statement on various calls. There are too many variables. They could all get to the manufacturing stage, or 20% of them could. The fact that design wins are increasing though would increase the chances of more of them moving through the process to revenue generation, simply because there are more chances in play.

Posted by sharpinvestments - 14 years ago

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Although I haven't ever worked at Vitesse, I have worked at some of their competitors. In those companies a design win is typically defined as when a customer powers up a board in the lab with their chip on it.

As mentioned upthread, many many 'design wins' never lead to actual revenue. In fact in China with big companies like Huawei and ZTE, I have often seen that these companies will start 10 different board designs for a particular proposed project. Each board design is being done by a different team within the company (since manpower is cheap over there). The company will let each team progress to the prototype stage before deciding which one or two are doing well enough and killing off the others.

In that kind of environment you can end up with lots of design wins and yet small revenue as a result.

Posted by ahab - 14 years ago

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CRG has defined design wins in prior speeches. you can be cynical but as i recall it - -a design win at vtss requires a commitment to a minimum qty for pilot production. since most of vtss chips are unique pinout and single source, they are not counting wins at the design bakeoff stage.

the reason for the talk about design wins is that it is at a historically high level, which implies that revenues will rise on future sales of products in pilot production with vtss chips as the design winner. the switch products in design and moving thru pilot to first run production are already contractualy known and tracked by vtss. they are the switch kings.

you can debate this if you like. i choose to say that vtss is counting over 1 design win per calendar day in the last qtr. if you don't see that as significant in the chart from the b. riley conference, then maybe you should go back and listen to the AMCC conf. call and see if they even gave a design win tally.

vtss is kicking butt right now. the proof will come in the next 12-18 months. for once, we will see this wave come thru to the shareholder's bottom line.

Posted by daWiley1 - 14 years ago

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Thanks for the input. I continue to be impressed with the knowledge base out there. And thanks Ahab for your comments from industry experience.

One thing I have never been able to ascertain is what is the typical, and I would settle for what is the largest, amount of revenue VTSS gets from one successful product. I know that there are many many variables in this. But does anyone have any idea what amount of revenue can be achieved from one "successful" product. Are we talking $1 million annually or $5 million or $10 million or what?

In other words out of the 30 new products that have a been introduced how many of them have to hit to get VTSS $12 million in new annual revenue?

thanks again for the input. You guys are great.

Posted by dlog - 14 years ago | Updated 14 years ago

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